Federated Department Stores Inc. yesterday reported a 26 percent drop in fourth-quarter net earnings.
The decrease resulted from credit problems at its Fingerhut catalog unit and charges from closing its Sterns stores.
Excluding unusual charges related to the Fingerhut business, earnings were $434 million or $2.15 per share. Net income for the quarter, which ended Feb. 3, dropped to $332 million or $1.65 per share, from $448 million or $2.06 per share a year ago.
“This has been a disappointing year overall, primarily due to the negative impact of the Fingerhut credit problem on Federated's earnings performance,” Federated chairman/CEO James Zimmerman said in a statement. “However, our department stores performed well despite a difficult economic climate, and we generally are pleased with the results from that segment of our business.”
In October, Chicago-based Federated cut jobs and operations at its Fingerhut unit in an effort to boost profits. Prior to the cuts, the catalog and Internet business was tackling credit problems.
The company also announced plans earlier this month to close its Sterns department stores.
Federated operates more than 400 department stores, including Burdines, Goldsmith's and The Bon Marche. The company also has direct mail and e-commerce operations for its Macy's and Bloomingdale's businesses.